Building a local economy versus "economic development": Online Gambling

One of my complaints in urban revitalization is that the average city, including DC, treats any new economic activity as "economic development," and all economic development is positive, when some activities are "better" than others in terms of income, tax revenues, spillover development, the economic multiplier effect, and how much of the money recirculates locally versus is siphoned off to headquarters cities.

The economic multiplier is defined as:

... a multiplier broadly refers to an economic factor that, when increased or changed, causes increases or changes in many other related economic variables. In terms of gross domestic product, the multiplier effect causes gains in total output to be greater than the change in spending that caused it. (Investopedia)

This is a big issue with sports events.  They are touted for their local effects on the economy, especially small businesses, but mostly they benefit airlines, hotels, and rental car companies--most of which aren't local, so the money spent doesn't end up in the host city for very long.  Although there are some benefits on food and drink, and for employment of people who put on the related events around the spectacles.

I have been following this for a lot of years.  Pre-event press coverage touts the benefits in superlative terms.  Post-event coverage focuses on how local businesses didn't benefit.  

Formula 1 grandstand, Las Vegas.  

A current example is the Formula 1 Grand Prix in Las Vegas ("‘F1 Fooled Us’: $4 Million Losses Served by Las Vegas GP Makes Local Business Owners Hit Back," "“Tons of Other Businesses Suffered”: F1 Fans Lash Out After MGM Resorts Announces Historic Revenue From Las Vegas GP," Essentially Sports).

Big corporations benefited.  But small businesses did not.

Gambling.  But I mention this because of a study referenced in the Guardian, "Gambling boom detrimental to New Jersey economy, report says."  From the article:

New Jersey, which led the charge for mobile sports betting’s legalization, has received hundreds of millions of dollars in taxes from the sector. But economists cautioned that the cost of higher problem gambling rates could be “roughly equal” to the state’s takings. 

In a report seen by the Guardian, they estimated economic output, jobs and wages have been knocked by New Jersey’s digital gambling surge – calling into question industry claims that legalization can provide a boon to states nationwide. 

The research, commissioned by the Campaign for Fairer Gambling, found that $2.4bn spent by people gambling online in New Jersey in 2022 “decreased New Jersey’s economic activity by about $180m”. 

Had the same amount of money been spent on another activity, like shopping or dining, NERA Economic Consulting estimated that significantly more would have been paid out in wages, which employees would have then spent on other parts of the economy.

Economic development versus building a local economy.  Online gambling is a perfect example of the difference between the two.  ED says economic activity increased.  BALE says that the net economic benefit was diminished because gambling is a less productive economic activity than others.

Unfortunately, economic impact studies are usually conducted by the proponents, not an independent organization, and cities, especially elected officials, aren't particularly skilled at digging into the claims from a more nuanced perspective.